>> chris: i'm chris walls wallace, 30 days and counting, until we go over the fiscal cliff. ♪ >> chris: the president is demanding higher tax rates.

congressional republicans want deeper spending would you tell us and entitlement reform. will they make a deal before we bring in the new year with a round of tax increases for all of us? we'll ask the two men at the center of the negotiations, where we really stand. for the president, treasury secretary timothy geithner, for the g.o.p., house speaker john boehner. geithner and boehner, only, on fox news sunday. plus we have seen this movie before. the two parties edging closer and closer to the brink. we'll ask our sunday panel whether we'll get a happy ending for an economic disaster. and our power player of the week, a young beauty queen has to make a tough choice, all, right now on fox news sunday. ♪ >> chris: and, hello again from fox news in washington. well, we had quite a day around here, friday. with talks to avoid the fiscal

cliff deadlock and everyone saying, the other side is to blame, treasury secretary geithner scheduled a round of interviews, then, friday afternoon, speaker boehner's office called to say he wanted to come on fox news sunday, to tell his side of the story. you'll hear from boehner in a few minutes, but first here's my conversation with tim geithner about the lack of progress in steering away from that cliff. >> chris: secretary geithner, welcome back to fox news sunday. >> nice to see you, chris. >> chris: i spoke with house speaker boehner just before i came over here and he says when you present your plan to him on thursday, he said you can't be serious, and, mitch mcconnell, the senate republican leader said he burst into laughter. >> they are in a tough position now and it will be -- obviously hard for them now and they are trying to figure out where they go next and we might need to give them time to figure that out, but what we did is, what you expect from us, we laid out

a very detailed, carefully designed set of spending, and t protect taxes, taxes from going up, for 98% of americans and investments for infrastructure and we think that is a good set of proposals and if they have different suctions and want to go further, they should lay it out to us. >> chris: when you say, they are in a hard spot, what do you mean. >> because they are trying to figure out how to find a way to support things that they know they are going to have to do. that will be hard for them, again you heard them for the first time in two decades, analogy they are willing to have revenues go up as part of a balanced plan and that is a good first step but they have to say what they are willing to do on rates and revenues, and that is hard but there is no way out of it, and, if on the spending side and they have to say what makes sense to them. we can't figure out what works

for them. >> chris: the president campaigned for re-election on the idea of a, quote, balanced approach, end quote, to deficit reduction, a mixture of tax increases and spending cuts. here's the plan that the republicans say you presented to them. >> i can tell you what i presented. it will be helpful. >> chris: let me -- >> it is our plan, let me do it. let me explain it. >> chris: i'd like to ask you about this part of it and you can tell me. >> okay. >> chris: $1.6 trillion in tax increases. more than $80 billion in new stimulus spending, next year, and, unspecified nonguaranteed spending cuts. question, is that your idea of balance. >> it is, let me explain what is in the explain they didn't report to you and explain, to people, which is, we propose alongside the trillion dollars in spending cuts we agreed with republicans, last year, on defense and a range of other government programs, proposed $600 billion of detailed reforms

and savings, to our health care and other government programs, that is $600 billion. in fact, the health care savings in that plan, are larger than the plans we have seen republicans in the past in the context -- >> was that in the budget. >> these proposals -- we proposed these last fall and in the president's budget, they are very detailed and -- >> that was a budget voted down 99-0 in the senate. >> a lot of politics in the town, and it is carefully designed set of reforms and if they want to go beyond the reforms and do it differently they should say how. we can't do -- >> what if they were to propose the republican budget they passed? they passed the last two years. >> there is no risk they'll do that, chris. >> chris: wouldn't it be as serious as you proposing your budget. >> the american people have taken a long time to take a careful, hard look at the plan and found no merit in it. so, the republicans aren't going to propose it again. >> chris: like the senate voted

it-0 against your budget. >> the senate already proposed and enacted a middle class tax extension, that protects 9 8% of americans from their taxes going up and we proposed substantial additional spending reforms alongside what we did last year, a trillion dollars to make us get to a broader fiscal balance. again, chris, you referred to things that will help make the economy stronger in the short-term and let me explain why we proposed that. what we are suggesting is that we work to rebuild the country's infrastructure, rather than putting it off, doesn't say just to put it off and extend unemployment insurance benefits and help make it easier for americans to refinance mortgages and, tax incentives for business investment and proposed how to do that in a fiscally responsible way we can afford to pay for and matched those proposals, with spending savings that, together as part of the plan, get us down to the point where we stabilize our debt and that is the critical test. >> chris: let me drill down into the spending part of the

equation, here they're increases, spending increase as you are proposing. $150 billion, in stimulus, public works projects over several years. a $30 billion extension of unemployment insurance, for one year. extension of payroll tax cuts, mortgage relief, deferral, of automatic cuts for doctors and medicare. here are the spending cuts. unspecified savings from nonentitlement programs, next year. let me finish -- and, the promise of $400 billion in savings, from entitlement programs to be worked out next year with no guarantees. speaker boehner says, even if you get all of this, it is a net increase in spending, not a net cut. >> not true and let me explain why. those investments in infrastructure, extension of unemployment benefits are important and good things, and we propose how to pay for them and, in contrast to what you said, we propose $600 billion in reforms to mandatory programs,

over ten years and are prepared to do a substantial portion of those up front in ways that are measurable to replace the much more damaging sequestering and when republicans say to us we want to see spending savings locked in up front we say we agree with you. you have to give us a sense of what we should do up front and the second stage and we are waiting to hear from them and if they need more time to figure out what they want to do, that is okay. we don't have much time and they have to make sure they commit to all americans they will not let taxes go up for 98% of americans. >> chris: one more question on spending the bowls simpes-simps proposal, what is your ratio, spending cuts to tax increases. >> good question, roughly, 2-1. now, the bowles-simpson commission proposed about $2.5 trillion in revenues over ten years, relative to current policy. so, we propose more modest increase in revenues, alongside

very substantial spending and savings, too, the ratio is roughly... >> chris: $1.6 trillion in tax increases is a modest proposal. >> it is and, relative to $2.5 trillion in the simpson bowles commission. >> chris: 3-1. >> it is true, we are not 3-1, we are roughly 2-1 and we think that is a better way to do it and, what we are trying to do is make sure we are strengthening medicare, not shifting costs to seniors and are making room to invest in things that are important to how we grow in the future. >> chris: let's talk about taxes. the president made it very clear and made it clear during the campaign he will not spend the bush tax cuts on the top earners. does he insist on raising the top rate from 35% all the way up to the clinton rate of 39.6%, or would he compromise on something lower, like 37%? is that negotiable. >> we will not extend an extension of the tax rates for the top 2%, we think they should go back and need to go back to

clinton levels and let me explain why. >> chris: i just -- to answer my question, specifically, you are saying nonnegotiable, 39.6%. >> we think that is the way to do it. if you don't do that, it costs a trillion dollars, roughly a trillion dollars over ten years. >> chris: not if you went to 37%. >> again, but you are -- >> that is one of the ideas, out there, sir, i'm not making it up. >> that is out there, and again we are proposing to let the rates go back to clinton levels and that was a time of remarkably good economic growth, in the country. strong private investment, and strong job growth, strong broad-based growth in incomes, and, it was a good time for the american economy and in addition we propose to limit deductions for the top 2% of americans as well and are willing to work with republicans on tax reform to create simple and a more fair system only as part of an agreement, that has those rates go back up, at the end of the year. >> chris: clinton? 39.6%. >> we think that is the -- the

reason why -- >> i understand the reason why. >> if you don't you have to ask yourself, whose taxes will you raise and where will you find the money, to bring a balanced plan in place, that reduces our long term deficit. >> chris: how disastrous for the economy if we go over the cliff that's treasury secretary? >> for the american economy? it is pretty damaging to the average american, and there is no reason it should happen and the only reason would be if a group of members of congress decide they'll block an agreement because they want to extend tax rates for the rich we cannot afford, that is the only reason it would happen. >> chris: they say because you are not willing to cut spending. >> that is not true, if they want to do more than the $600 billion in addition to the other and, the savings from the wars. >> chris: savings from the wars we were never going to fight. >> as you know, we're winding down two wars. >> chris: i understand that, sir -- and you are counting in savings nobody thought you would spend the money any way, it is a budget gimmick, sir. >> that is not right. say it this way, those were

expensive wars, not just in americans lives but the taxpayers' resources and when you end them as the president is doing they reduce our long term deficits and like the republican budget proposals, the world should reflect and recognize what that does in savings, and we propose to use those savings to reduce the deficits and help invest in rebuilding america and we think it makes a lot of sense. >> chris: but it was money that wouldn't have been spent anyway. >> if those wars would have gone on... >> chris: you are no ending the wars for budget purposes but because of the foreign policy decision, the wars were not going to be fought and you are not really saving money, it is a budget gimmick, money -- >> no, it is not, when republicans propose it is a budget gimmick. >> chris: sure, absolutely. >> address it with them. >> chris: well, i'm addressing it with you. >> again, it is a basic challenge we face, chris, the challenge we face, which is how to bring the deficit down over time, now, it will require spending savings, it will require increasing in rates of revenues and we think we can do

it and will work hard to do it and have a good chance to do it and no reason we can't. >> chris: last question, can you promise that we will not go over the cliff. >> no, i can't promise that. that is a decision that lies in the hands of the republicans, that are now opposing increases in tax rates, if they recognize the reality, that we cannot afford to extend the tax rates we have the basis for an agreement that would be good for the american people. >> chris: and the president bears no responsibility, it is all up to the republicans. >> chris, ask yourself this question, why does it make sense for the country to force tax increases on all americans, because a small group of republicans want to extend tax rates for 2% of americans, why does that make any sense? there is no reason why it should happen, we can't afford the tax rates, that is like the deep tragic lesson of the last decade, we and not afford them and will not get through it, to the end now, without a recognition of the republicans to that basic reality and that will be the responsible thing to do and my judgment is, they are going to do it because there is no alternative to that.

>> chris: mr. secretary, thank you, always a pleasure to talk with you. >> good to see you. >> chris: up next you'll hear from speaker of the house, john boehner, who describes his reaction when geithner presented the white house plan and he lays out what it will take to get a deal. it's a fox news sunday exclusive. ♪ i'm a conservative investor. i invest in what i know. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul. i see a world bursting with opportunities. india, china, brazil, ishares, small-caps, large-caps, ishares. industrials. low cost. every dollar counts. ishares. income. dividends. bonds. i like bonds. ishares. commodities. diversification. choices. my own ideas. ishares. i want to use the same stuff the big guys use. ishares.

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>> chris: as we said, house speaker boehner's office called us to say he wanted to come on fox news sunday to tell his side of the story. he says the president wants to ram rod a deal through, not work out a compromise, and, boehner might, he suggests, be willing to go over the cliff. >> chris: speaker boehner, welcome back to fox news sunday. >> good to be with you. >> chris: how would you characterize the deal the treasury secretary offered you on behalf of the president this week. >> a nonserious proposal, the president asked for $1.6 trillion worth of new revenue over ten years, twice as much as he has been asking for in public. he has stimulus spending in here that exceeded the amount of new cuts that he was willing to consider. it was not a serious offer. >> chris: you you are saying there is more spending than spending cuts? >> that's correct. they outlined, they would be

willing to talk about $400 billion worth of cuts over ten years. but, at the end of the year, they wanted to extend unemployment benefits, they wanted a new stimulus program, for infrastructure, they wanted to extend some other tax breaks and all of the and it would be more than the spending cuts he was willing to put on the table. understand, chris, the day after the election, i saw the results and went to the cameras and made it clear the republicans were willing to put revenue on the table if there were serious spending cuts and reforms put in place. we talked about it. the president and the white house have had three weeks and this is the best we've got? >> chris: take us behind the scenes, inside the room. what was the mood music when tim geithner sits there, like we are here and presented this to you? what did you say?

>> i was flabbergasted. i said you can't be serious. i have never seen anything like i we have seven weeks between election day and the end of the year and three of those weeks have been wasted with this goods okay, wasted, where are we now and, quite frankly, what are the chances we'll end up going over the cliff? >> now, i would say we are nowhere, period. we are nowhere. we have put a serious offer on the table, by putting revenues up there to get the question resolved. the white house responded virtually nothing, they've actually asked for more revenue than they have been asking for the whole entire time. >> chris: what they're chances we'll go over the cliff. >> listen, if we go over the cliff we'll hurt the economy and job creation in the country and it is not fair to the american people and this is not an issue about democrats and republicans, goodness, this is about or country and we need to get serious about dealing with the problems at the end of the year and need to get serious about our deficit and our debt. that are burying our children's

future. >> chris: i want to ask you one other question about their offer, because this was a real surprise, geithner also said they want you, congress, to give up any powers over voting an increase in the deficit, forever. >> congress is not going to give up this power, i've made it clear to the president, that every time we get to the debt limit, we need to cut reforms that are greater than the increase in the debt limit. it is the only way to leverage the political process to produce more change than what it would, if left alone. >> chris: okay. the president and democrats are saying, look, we have already agreed since 2010, since the republican victory, to more than a trillion dollars in spending cuts out any increase in revenue so we have already given. >> that doesn't solve the problem. we have a debt burden that is crushing us, and it is -- look at the president's budget, we have trillion-dollar deficits

for as far as the eye can see. this is unsustainable. we have 10,000 baby boomers like me retiring every day, 70,000 this week, 3.5 million, retirees, this year alone. signing up for social security, and medicare, people living longer, accessing medicaid. and, it is not like there is any money in the social security trust fund. or the medicare trust fund. it has all been spent and the whip-saw effect it is having on the budget is horrendous and if we don't get ahold of it, we're mortgaging our children's future and i will not be part of it. >> chris: you say you will not be part of it. you are stuck, given the job you have. >> i will not be part of further mortgaging our future. it is time to get serious about our debt. >> chris: what about the trillion dollars, though, is it fair to count that as part of $4 trillion in debt reduction. >> it should be part of the percentage if they want to count it but what about the next 3, $4 trillion that need to happen if we put america on a fiscally

sustainable path. the proposal we got from the president. if we gave the president $1.6 trillion of new money, what do you think he'd do with it? he's going to spend it. that is what washington does. >> chris: you don't believe he'd use it to help pay down the debt. >> he'll spend it. look at the fact. they put $400 billion worth of unspecified cuts they are willing to talk about and at the same time, that is over $400 billion, over ten years. while he wants over $400 billion, in new stimulus spending. this is an unserious proposal. >> chris: you you talked about the fact that the president won and you came out with a concession the day after the election and they point out that the president campaigned on raising tax rates, you know, and it was the big issue, between him and romney, and, they say, just as he had to cave, after your victory, in the 2010 midterms, now, it is your turn to cave on tax rates. >> what is this difference where

the money comes from? we put $800 billion worth of revenue, what he is asking for, out of eliminating the top two tax rates. but, here's the problem, chris: when you go and increase tax rates, you make it more difficult for our economy to go, after that income, the small business income, it is going to get tackxed at a higher rate an as a result we'll see slower economic growth, we can't cut or grow our way out of the problem, we have to have a balanced approach and the president wants to slow or economy at a time when he says he wants the economy to grow and create jobs. >> chris: the white house says that while you have given this kind of talk, about, well, let's close loopholes and limit deductions, you have not offered any specifics, have you. >> we have laid it all out for them, a dozen ways to raise the revenue from the richest americans, as the president would describe them without raising tax rates. >> chris: what is the biggest

proposal you you put on the table since the election in terms of raising revenue from closing loopholes an deductions. >> you can cap -- there are a lot of different ways but you can cap deductions at a percent of income. one way to get there. you can eliminate certain deductions for those, the wealthiest in our country, you could do all of that. >> chris: let me ask you a couple of specifics, would you eliminate or lower the home mortgage deduction. >> there are lots of ways to get out there, there are lots of ways to debate or negotiate with you, but if you can sign the bill into law, i would be happy to. >> chris: charitable deductions? you are a big charity guy. >> the president has seen a lot of the options from us, there are a lot of them put on the table and i'm hopeful the conversations will continue. >> chris: okay. but, let's talk about your proposal, because, the president -- and i'm sure this has driven you nuts, says, the math tends not to work. look at your math.

the white house says a realistic cap -- and i'll explain what that means, $25,000 on people making more than $250,000, a cap on deductions, you can only take $25,000 in itemized deductions and exempting things like charitable deduction, unlikely you would do away with that would only bring in $450 billion, not the $800 billion you are talking about or the trillion, $450 billion. the math tends not to work, they say. >> no, the white house knows the math will work. the perfect kinds of revenue on the table we have been talking about. it won't work if we are trying to get to $1.6 trillion, i'll guarantee you you that but we put the revenue on the table. and, again a dozen different ways to get there without raising tax rates. >> chris: you can get up to what amount? >> basically the number that we have been -- >> $800 billion. >> somewhere in that range. >> chris: the white house, talking about specifics, also says you and the republicans have offered no specifics for spending cuts or entitlement

reforms. have you? >> chris, look at the house republican budget, offered by paul ryan. in 2011. the same budget in 2012. passed the congress, all types of specific proposals. i go back to the government -- >> he campaigned against that and he won. >> back to the super committee. all of the ideas that were out there. look at the conversations the president and i had. based off the simpson bowles commission, his own deficit reduction commission. he knows what our proposals are and what we are willing to do. what we don't know, chris, is what is the president willing to do? >> chris: well, let me ask you specifically about that. is it true, it is said -- we have never seen a piece of paper. is it true that the president offered to raise the eligibility age for medicare and slow cost of living adjustments for social security when you were in your debt talks in august of 2011? >> it was on the table. did the president agree to it...

he may have been close to an agreement to it. if he agreed to it, we might not have this problem today. >> chris: is that on the table now. >> of course it is. >> chris: no, from their point of view? >> listen, there are a lot of items on the table. the president knows what they are. the question is, what are they willing to do. >> chris: you are starting to have political problems, because you are starting to have splits in your ranks, i don't have to tell you you one of the top congressional republicans, tom cole, said, you know what? i'm not comfortable standing in the way, holding hostage extending the bush tax cuts to lower rates for the 98%, people making under $250,000 and you were not happy he said that. >> no, i wasn't. >> chris: breaking ranks and isn't it tougher to hold to that as you get closer to the cliff and people face a tax increase of $2,000? >> that is what is so sad about the situation we're in. the president, not being serious

about coming to an agreement. holding the middle class tax hikes over their heads. >> chris: he says you are doing it. >> this is america. this is our economy. we all want the economy to get better and americans to have more opportunities at jobs and this agreement should come sooner rather than later, because, just the threat of the fiscal cliff is already hurting our economy. and, i believe raising tax rates hurts our economy and the prospects for more jobs in our country and the president may disagree but the fact is if there is another way to get revenue from upper income americans that doesn't hurt our economy, why wouldn't we consider it? >> chris: what if we go over the cliff? doesn't thethe cards, then? can he say, all right, everybody's taxes increased and i'm offering 98% a tax cut of $2,000 a year, you are the party of lower taxes, are you going to

refuse to cut people's taxes? >> listen, nobody wants to go over the cliff. that is why the day after the election i tried to speed this process up by making a concession to put revenues on the table. and it is unfortunate that the white house spent three weeks doing basically nothing. >> chris: you have been around this time, a long time and have been through a lot of negotiations. what is their game? what is their thinking as to how they will work -- well, they figure they won and they will get what they want? >> i have no idea, chris. if i knew, i would share it with you. i don't know what they are thinking. >> chris: do you think they are being bullies. >> i think they've won the election and must have forgotten republicans continue to hold a majority in the house. but, you know, the president's idea of a negotiation is, will they do what i ask. we need to find common ground and need to find it quickly. >> chris: and, again, you kind of didn't answer it the first

time, what are the chances we'll go over the cliff. >> there is clearly a chance. but i will tell you, i might be an easy guy to get along with, affable, obviously, i've worked in a bipartisan way on a number of agreements but i will tell you one thing, chris, i'm determined to solve our debt problem. we have a serious spending problem and it is going to be dealt with. >> chris: and if the white house is unwilling to do it, are you prepared to say -- >> we are going to deal with america's debt problem. >> chris: and if they refuse to do it in the way that you find acceptable? >> we are going to deal with it. >> chris: sooner or later. >> sooner or later, we'll deal with the debt problem and we're going to do it now. we will not kick this can down the road again. >> chris: so, if it takes it, you will go over the cliff. >> i don't want any part of going over the cliff. i'm going to do everything i can to avert that. >> chris: but... >> but we are going to solve

america's debt problem. >> chris: speaker boehner, on that happy note, thanks for talking with us. >> thank you. >> chris: thank you. >> chris: up next, we'll bring in our sunday group, where do they think negotiation stand and will there be a deal, before we reach that cliff? ♪ two years ago, the people of bp made a commitment to the gulf. bp has paid over twenty-three billion dollars to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america.

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>> the lump of coal you get for christmas, a scrooge christmas. >> it was not a serious

proposal. and so, right now we are almost nowhere. >> chris: president obama accusing republicans of being willing to raise taxes on 98% of americans, while speaker boehner says it is the president who is unwilling to compromise. and it is time for our sunday group, bill kristol of the weekly standard. mara liasson of national public radio, republican strategist ed rollins and former democratic senator evan byah. you heard for the last half-hour, tim geithner and john boehner, each say they are being reasonable and it is the other side's fault. bill you have been through your share of washington negotiations. what strikes you about what you heard today? >> geithner is in a stronger position, in the respect. the president is net and high can maneuver and say, $1.6 trillion and, they say, $1.1 trillion and speaker beginner has 235 members, and they don't hop to it when he decides to move, he's in a much tougher

position structurally and we have seen the history of the show downs, the white house usually wins, and, the main reason why is, he is a unitary executive and, the majority party in congress is in a weaker position. >> chris: mara. >> what happened this week is interesting, it is kabuki theatre and both sides are putting out maximalist positions and saying the other guy is intransigent and that is how they tell the troops they are trying as hard as they can before they cave because the republicans have to move on tax rates, not just revenues, and, the democrats have to do a heck of a lot more on entitlement reform than is in the president's professional. that is what is going to happen if the deal is going to be done even if it happens after january, after a couple of failed votes. after some kind of -- a little bit of falling off the cliff. and, i continue to believe that that is what is happening, not that this is going to end in complete disaster. >> chris: i have to say, and

part comes from having talked to the two men, what struck me was how genuinely shocked boehner was at the proposal he got from geithner, how little there was in terms of spending cuts and how little there was in it in terms of entitlement reform, and, also, the new demand, that seemed to come out of nowhere, congress in effect gives up its power over the debt limit. is there the possibility here the president is overplaying his hand. >> the last issue, it is absurd, no congress is going to give up the power to set the debt limit and i'm not sure they can, the constitution gives them that power, at the end of the day my sense is they are talk at each other and not to each other. this is a status quo election. the president had a great re-election. house republicans own the house and democrats the senate and they have to sit down and do negotiating and it isn't boehner versus geithner, it is basically can the house republicans buy a plan that basically they can sell to 218 members. and can the senate go along with that and if so will the

president sign it and until they sit in a room and discuss all of those elements of it at this point in time you get people talking at each other with a lot of absurdity and the most absurd part, talking about $85 billion a year, in added revenue over a ten-year period. and we are spending over a trillion dollars in debt over year, and not even putting anything into it and republicans have been down the road before and they were promised 3-for-1, for every dollar in taxes, three cuts, it never happens and they are realizing, it is actually on the table, signed off on by all sides, they will not buy into it. >> chris: senator, did the president in the offer with so little in spending cuts and tax reform, the debt limit, did he overplay his hand or is he being realistic as bill suggests, he has that much leverage? >> i think both, chris. i agree with mara, i think it is likely kabuki theatre, these are opening offers in a longer negotiation and if it was easy it would have been done by now

and you are seeing basic philosophical differences in the party's bases and that is why it is hard but at the end of the day, they have to make a deal, i put the odds at 70% they do and 30% they don't. >> chris: before the end of the year. >> the reasons are a couple, it will go to the end, it always does in legislative bodies, the same in indiana general assembly, the reason is you have to show your base you are fighting to the end and not giving in. and also, the amount of giuff yu take, when you compromise and at the end of the day, the political realities suggest they have to get a deal and the president will get most of what he wants because he won and 55% of the american people said they'll blame the republicans if they don't get a deal and at the same time the president needs an extension of the debt ceiling and also want to get the issue off his back, so he can go on to other parts of his legacy and that it why at the end of the day they'll get an agreement. >> chris: are you as optimistic as that, bill. >> i think so and i'm surprised the president is embracing something -- i wish the republicans would listen to mean, instead of the president, the extension of the payroll tax

cuts, the republicans have a risk now of looking like they are defending, keeping the current tax rates for the wealthy, the bush tax rates for the wealthy and, the official republican position is, let the payroll tax rate go back up two points and that is a 2 percentage point increase on every american, but, a 2% -- and a marginal increase on everyone making less than $200,000 a year and i am worried republicans, president obama, we say he is overreaching and it ties much and at the end of the day, president obama is selling a simple message. i want to keep taxes low for middle class americans and, republicans look, i'm worried, are in a position of looking like they don't care about the middle class and want to keep tax rates low for wealthy americans. >> chris: one thing that struck me in my interview with tim geithner, mara, the president made it clear the bush tax rates and top 2% said they had to go up but not all the way to 39.6% an geithner essentially said

they do. >> i think the white house is willing to settle for something in the middle there, above the bush tax rate and not all the way back up to clinton, maybe not even for 250 and above, maybe 500 or a million, there are moving parts there. i think he says in every speech he goes out and gives the hard line message to the base, i'm not going to be the wuss you thought i was last time and also, always says, i want to compromise and, we have to get out of our comfort zone and i want a good deal. >> chris: ed, senate republican leader mitch mcconnell added another wrinkle to the whole deal, after our interviews, the day "wall street journal," he said that he wants structural entitlement reform and you can see the ideas there, to both medicare and social security. like the president was offering back during those big debt talks in august of 2011. but the president and democrats seem in no mood to revisit those kinds of big structural entitlement reforms. >> you are correct and mcdonnell is correct. if you don't get the structural

reforms at this point in time, at least a commitment to do it, it will not happen. the one thing we know, if we go over the cliff it will not help our economy. it will probably sent us back into another recession and i don't think anybody wants that. at this point in time, though, for the long term structural changes that need to be made, now is the time to do it, why i think they need to sit down and negotiate, as opposed to yelling and screaming, this is a short-term, even if you -- anything the president will do, it does not resolve the trillion dollar a year deficit and the long term trukt structural things and we have to take advantage of -- facing the cliff, idiotic to begin with, and make something positive out of it. >> chris: we have 30 seconds left, senator, but it doesn't seem like the president an especially, liberal democrats, unions, they don't want to go back to entitlement reform. big structural changes, raising retirement age, changing the cost of living. >> of course they don't, chris, and it gets back to the philosophical differences.

but, i think at the end of the day, this is a leadership moment and i think the president will pleasantly surprise skeptic and step up and certainly on means testing of medicare benefits, the cola increases, being more modest and maybe the age, though that is less likely to get a deal... >> chris: willing to take on -- >> i do, those discussions with boehner as the speaker indicated, that was on the table and that is not sacrosanct and the president has to give some there, particularly with the debt ceiling, the president will surprise people. >> chris: a pleasantly optimistic note. when we come back, the palestinians with a symbolic victory at the u.n., egypt fights over a new constitution and susan rice tries to win over critics in the senate. ♪ tdd#: 1-800-345-2550 let's talk about low-cost investing.

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>> chris: still to come our power player of the week. >> know i'll walk across the miss america stage and not have my mom there. >> chris: after the pageant she faces a difficult choice. >> it is very -- fuels the fire within me to know that that is not a life i ever want my

♪ >> i am not competing with... less of a feeling about her judgment, and, about her suitability to be secretary of

state. >> chris: moderate republican senator susan collins, still expressing doubts after meeting with u.n. ambassador susan rice, and we're back now with the panel, well i think it is fair to say, it sure seems like susan rice was on a pre-nomination charm tour, to try to disarm some of her republican senate critics and smooth relations before the president names her secretary of state. senator bayh, why do you think it went so badly? she certainly didn't disarm the critics and, at this point, do you think it would be a mistake for the president to go ahead and name her secretary of state? >> why it went badly, chris, i don't know, i wasn't in the room. whether my friends, senator mccain and graham were willing to be charmed, that is an open question. >> chris: but susan rice is a pretty steady hand and i'm not saying john mccain and graham aren't but she -- >> what interested me is susan collins, if the republicans choose to filibuster the

nomination you need five republican votes and susan collins has to be one and the fact that she is expressing reservations is concerning, but i think, ambassador rice is getting a bum rap on that, and i encourage my republican colleagues talking about weapons of mass destruction in iraq, before the iraq war, to have a little humility in terms of making public statements that turn out to, in the light of all the evidence, have been less than accurate and anybody who would have come on the show, the secretary of defense, state, head of the cia would have been in a similar situation and the real question is, is there evidence of intentional deception and any evidence of a political cover-up and to do it there is not and we ought to focus on why the security is so poor is that facility... >> chris:... make a mistake taking on the fight? >> he's on the horns of a dilemma here, if he doesn't nominate her he looks weak and if he does he has a fight on his hands, and potentially, somewhat polarizing secretary of state figure and my guess is he'll choose to go forward and try and persuade the critics there is no

"there" there, which i think there is not at the end of the day. >> i'm not a big rice fan but if the president wants to put her at secretary of state, it is his prerogative, it will be a knock down, drag out fight, but at the end of the day they'll move forward. >> chris: the overwhelming vote at the u.n.week, 138-9, to recognize palestine is a nonmember observer state. mara, what does it do for the palestinians and what does it mean in terms of the israeli-palestinian -- if there is -- peace process. >> a big boon for the palestinians, they were thrilled about this and it is something the united states didn't want to happen. they were unable to storch it. as in many things in the middle east, not under our control, and, at least in the aftermath it looks like it makes a settlement between the israelis and the palestinians actually harder to reach because the israelis immediately want ahead and announced blueprints for more settlements, in a particular area that would make it harder to have a contiguous

palestinian state if there was ever was. so, i think it is probably, you know, a step forward, psychologically for the palestinians and step backward for the peace process. >> chris: bill, let me explain, israel announced the day after the vote they will go move settlements east of jerusalem that would split the west bank and that is obviously something the palestinians are very upset about. so, when you add that to this vote, where are we, in a possibility of any peace talks. >> we don't have much possibility. the palestinians want to control -- even who the u.n. likes to think is palatine and, gaza, is controlled by hamas and seems to be getting a little stronger in the west bank and interesting things came out the last few days, during the gaza conflict, abbas, head of the palestinian authority placed several phone calls to egyptian president morsi and he refused to take the call, he wants hamas to be stronger, and the problems in

the middle east are so large now and part of this because of our weakness, and, where they build the houses on the outskirts of jerusalem, no one will remember that two months from now. >> chris: they died it against u.s. wishes an defied the administration, too, no one seems to be listening to them. again, there is egypt. and the continuing protest, senator bayh in egypt, thousands of people demonstrating a year or so ago against hosni mubarak and now the new egyptian president morsi and the draft constitution written by an islamist assembly and critics, including those on the street say it doesn't provide enough guarantees for women's rights or minority religions. what do you make of the situation, in egypt and the dangers that it could turn into an islamic state. >> the bottom line in egypt, it is bad for egyptians and their political future, and perhaps not quite as bad for the long

term national security interests of the united states, any time a leader of a country like morsi puts himself above the judiciary it is not a good sign for democracy and when you run through a constitution with language that could lead to islamist interpretation, that is not good for their democracy. and it is particularly troubling, not only for egypt, but, for the long term course of events in syria, and things are extraordinarily polarized and a possibility of an islamist state there. but the more encouraging news, the brotherhood has shown they can -- >> the muslim brotherhood of which he was a member. >> there were calls to ban alcohol and they didn't do it, why? because they cared about tourist dollars and, changing women wear on the beaches and they were concerned about the economic realities and they need western aid and the gaza conflict they behaved responsibly and tried to bring things to a conclusion and there is evidence while they may be throwing bones to the fervent supporters in terms of

constitutional language and that is concerning, at the end of the day, when push comes to shove, they may behave more pragmatically. >> chris: your thoughts about egypt, bill. are you optimistic. >> iran has beaches with men and women mixed and, they have nuclear weapons, and, whe -- we retreat everywhere and, we didn't see -- the last four years we were living off the inherited capital of u.s. strength and look at syria and egypt and we're getting out of afghanistan and i have seen a moment of u.s. weakness and chaos following. >> chris: well, on that -- on that cheerful note... thank you, panel, see you next week, don't forget to check out panel plus where our group picks up with a discussion on our web site, foxnewssunday.com and we post the video before noon eastern

time and make sure to follow us on twitter @foxnewssunday. up next our power player of the week. ♪ aids affects us all. even babies. chevron is working to stop mother-to-child transmission. our employees and their families are part of the fight. and we're winning. at chevron nigeria, we haven't had a reported case in 12 years. aids is strong. aids is strong. but we are stronger. and aids... ♪ aids is going to lose. aids is going to lose. ♪ aids is going to lose. aids is going to lose. [ female announcer ] some people like to pretend a flood could never happen to them. and that their homeowners insurance protects them. [ thunder crashes ] it doesn't. stop pretending. only flood insurance covers floods. ♪ visit floodsmart.gov/pretend to learn your risk.

>> chris: she's one of those young women who has it all, beauty, talent, intelligence, but at her crowning moment she's carrying quite a burden. here is our power player of the week. ♪ >> choosing life over vanity and what society or hollywood tells me makes me beautiful.

>> chris: she is miss d.c. competing for the title of miss america in january. but she's not your typical beauty queen. yes, she's worked as hard as any of her competitors to develop her talent, artistic figure skating. and, to hone her fitness for the swimsuit competition. >> i worked so hard my entire life wanting to show case that and show case my talent and, show case your poise and beauty and your intelligence. >> chris: after the pageant she faces a difficult choice. at age 24, she has made her decision. >> i decided to have a prophylactic double mastectomy and i'll have my breast tissue removed in an effort to help prolong my life. >> chris: to understand her decision you have to go back a few years to her mother, judy. >> chris: how old were you when you lost your mom. >> i was diagnosed, my mom was diagnosed when i was 12, and spent the pinnacle years of me developing into a young adult having my mom battling breast cancer. >> chris: what makes it more

difficult, is her mother had a single mastectomy when he was 27. but refused to have her other breast removed. >> my mom never saw me get my drivers license and didn't see me graduate from high school. >> chris: it turns out the women in her family have a history of breast cancer. and now, she's learned that she has the same genetic disease they did. >> to know i'll walk across the miss america stage and not have my mom there fueled the fire within me to know that that is not a life i ever want my children to live. >> chris: her platform as miss d.c., and if selected as miss america, is early breast cancer prevention. she calls it planning a marathon, running a sprint. once again, it goes back to her mother, who used to run marathons. >> she said, that is my goal in life, i want to be 100 years old and my mom's plan for 50 more years turned into a battle for three and what happens when your marian on the turns into a sprint. >> chris: ever since she was named miss d.c. in june, she has

carried her mother's loss and legacy. >> when they announced my name, it felt like all of my mother's dreams for me had been realized and my own dreams for myself. >> chris: she knows what he faces after she completes her duties in these pageants but one thing she doesn't do is feel sorry for herself. >> chris: you are beautiful, you are accomplished, you are smart... >> thank you. >> chris: do you ever think, why me? >> no, because i know that i have been given these blessings. i think i have been given this incredible opportunity to help save the lives of other women, and, you know, by having this message, of my mom, of being able to show women that, you know, if i can do it, you can do it. >> chris: in college, she majored in government and interned on capitol hill. after her pageant days are over she'd like to run for office. after all, she says, what better way to change the world. and that is it for today.

have a great week, and we'll see you next fox news sunday. have a great week, and we'll see you next fox news sunday. ♪ captioning by, closed captioning services, inc.